There are currently 13 states that have an estate tax in the United States. First, you may be wondering what an estate tax is. In basic terms, when you die the government (both the Federal government and your State government) wants to know how much stuff you owned at your death. Certain states set thresholds for the value of the stuff you own at your death and then they tax you on any amount you owned over that threshold. Minnesota has an estate tax for any assets owned over $2,700,000 in 2019. This means that if you have $3,000,000 when you die, you will get taxed on the $300,000 over the $2,700,000 exemption. The rates of tax in Minnesota on amounts over $2,700,000 are between 13% - 16%. (Note that if you leave everything to your spouse, there is no estate tax due because of the unlimited marital deduction.)
Below are the states that impose an estate tax in 2019 along with their current exemption amounts:
|New York||$5.74 million|
|Rhode Island||$1.562 million|
There are also a couple of states which have an inheritance tax. An inheritance tax is a little bit different than an estate tax. An inheritance tax is a tax based on what a beneficiary actually receives from an estate. For instance, if Mom and Dad die with $3,000,000 in their estate, but they have three children who each inherit 1/3 of that estate ($1,000,000), then each of the children may pay an inheritance tax on the $1,000,000 received if they live in a state which has an inheritance tax. The following states have an inheritance tax in 2019:
You will see that Maryland is the only remaining state which has both an estate tax and an inheritance tax.
For those of you who are thinking it might simply be easier to move to another state, here are the states that do not impose any estate or inheritance tax in 2019.
Just because you live a state with an estate or inheritance tax, doesn’t mean that your estate or heirs will actually have to pay tax. There are often strategies that an experienced estate planning attorney can utilize to help you, your family, and your beneficiaries avoid paying estate or inheritance tax. Contact our office today to schedule an appointment to discuss how you can avoid Minnesota estate tax today.
Zach Wiegand is a Minnesota probate attorney and estate planning attorney and the owner of Gold Leaf Estate Planning, LLC. Gold Leaf Estate Planning is an estate planning law firm that also handles probate and trust administration in Minnesota. We serve the Twin Cities metropolitan area with a focus on estate planning for clients in Burnsville, Eagan, Savage, Prior Lake, Lakeville, Apple Valley, Eden Prairie and the South Metro as well as clients in Woodbury, Lake Elmo, Maplewood, Oakdale, St. Paul and the East Metro. Our firm has offices in both Burnsville and Woodbury/Lake Elmo. The firm also handles probate in Dakota County, Washington County, Scott County, Hennepin County, and Ramsey County and most other counties in the Twin Cities Metro area. Zach has been named a Super Lawyer – Rising Star for 2017, 2018, and 2019. In addition, Zach is a member of the Society of Financial Service Professionals, the Twin Cities Estate Planning Council, and WealthCounsel – a national organization of estate planning attorneys dedicated to practice excellence. You can contact Zach via e-mail at firstname.lastname@example.org or by calling (952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000 County Road 42 W., Suite 310, Burnsville, MN 55337 and in Woodbury/Lake Elmo at 8653 Eagle Point Boulevard, Lake Elmo, MN 55042.